| 913191 | |
| Marc Vanasse | |
| (613) 952-0243 |
24(1)
Attention: 19(1)
January 21, 1992
Dear Sirs:
Re: Workers' Compensation
This is in reply to your letter dated November 13, 1991 wherein you requested that we explain why the receiver of benefits paid out of the 24(1) ("Pension Fund") would not be entitled to a deduction from taxable income under paragraph 110(1)(f) of the Income Tax Act (the "Act").
The facts as outlined in our previous opinion dated October 11, 1991 are as follows:
Facts
1. Where compensation is paid to a worker under section 38.2 of the Compensation Act for a period exceeding twenty-four consecutive months, 24(1) will set aside an amount, representing eight percent of any compensation paid beginning in the twenty-fifth month, into a Pension Fund.
2. The Pension Fund is administered by the 24(1) on behalf of the injured workers.
3. The amount set aside shall not be deducted from the compensation paid to the employee, but shall be an amount set aside by the 24(1) over and above the compensation paid to the employee under section 38.2 of the Compensation Act.
4. The amount set aside shall be used to provide the worker with a pension at age sixty-five regardless of whether or not the claimant is injured or disabled at that age.
5. The benefits generated within the Pension Fund will be paid to the claimant via an annuity unless the total benefit is less than $500 where the payment will be made in a lump sum.
Our Comments
Unlike compensation paid to an employee under section 38.2 of the Compensation Act which is included in income under paragraph 56(1)(v) of the Act as worker's compensation , it is our view that amounts paid out of the Pension Fund fall more specifically within the definition of "superannuation or pension benefit" as this term is defined in subsection 248(1) of the Act. As a result, amounts received out of the Pension Fund will be included in the taxpayer's income under subparagraph 56(1)(a)(i) of the Act and the deduction from taxable income under paragraph 110(1)(f) of the Act will therefore not be available.
We trust our comments will be of assistance to you.
Yours truly,
J.A. Szeszyckifor DirectorPersonal and General SectionBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch